Online brokerage Robinhood announces another 7% staff cut! Offers 4.65% high-yield savings account to attract customers

The online brokerage Robinhood reported a $500 million loss in the first quarter and announced plans to lay off 7% of its workforce. They also introduced a high-interest savings account with a 4.65% yield in an effort to attract more customer funds.

Further Layoffs, 4.65% High-Yield Market Grab

In 2022, Robinhood underwent two rounds of layoffs, with approximately 9% of its workforce being let go in April and another significant 23% reduction in August. According to a report by CNBC, Robinhood announced this month that it will be cutting another 7% of its employees.

As the Federal Reserve continues to raise interest rates in the United States, Robinhood saw interest income reach $200 million in the last quarter, nearly matching its revenue from transaction fees. Robinhood has decided to pass on the high interest to its customers to attract more funds from clients. Through its Brokerage sweep program, customers' uninvested cash is transferred to partner banks, with regular customers earning a 1.5% annual interest rate, while Gold subscription members paying a $5 monthly fee can enjoy a high rate of 4.65%.

Robinhood's partner banks include Goldman Sachs, HSBC, Citigroup, and Wells Fargo. Given the current FDIC deposit insurance limit of $250,000 in the United States, Robinhood also provides a thoughtful sorting option for customers to choose the bank where they want their deposits to go, excluding accounts where they already have deposits, to achieve deposit protection.